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Good post Tim. One of the hardest lessons most traders have to learn is
that "out is a position." When you can't find good risk/rewards... call it
a day and conserve your capital for when you can.
Frankly, I prefer medium vol. to post swing and day trades in. Wide swings
and huge daily ranges make for a tough go when you are working with close
stops. A good example is tomorrow employment report... I seldom trade on
the day of this report unless I just see a setup that I can't refuse. The
rest of the time I don't feel as if I have a good enough handle on the risk
associated with what is generally the most volatile day of the month and I
certainly can't count on my stops being filled at reasonable levels (and I
have good brokers). Typically, I close all swing trades on the day prior to
the report, let the market establish something and then wait for my
opportunity to reenter into lower vol. May not be very exciting, but it
works for me.
At 11:23 AM 8/6/98 -0500, Timothy Morge wrote:
>Robert:
>
>One thing I'd point out to the less experienced traders that read this
list: The
>one true advantage small traders have over larger traders is that they can
>choose when to trade. The temptation is to always be in there, slashing and
>burning for a profit. But if you are trading your own capital [and
especially if
>that capital is small], capital preservation should be paramount. If you
watch
>the screen and call your broker and the size of the bid to ask spreads set
your
>heart to racing, maybe your instincts are telling you the market
conditions are
>too volatile for your trading skills and the tools you are able to
marshall in
>your trading. Trade when you feel comfortable with the market conditions.
>
>Don't allow yourself to feel an urgency to trade because 'this may be the big
>one!'
>Don't trade in overly-thin markets, whether the thinness is because it's
the day
>before Christmas or because you found a support line looking at November
Chinese
>silk cocoons. The markets will be here tomorrow and the next day and the day
>after that. And there will be plenty of moves in markets that have good
volume,
>liquidity and orderly conditions. Trade when you are at your peak, when
you are
>ready to trade and when the market conditions suit you.
>
>Tim Morge
>
>Robert W Cummings wrote:
>>
>> Looks like margins haven't increased yet on the S&P Futures but many more
>> days like Tuesday and Wednesday I believe it might soon. Hundred points
>> ticks are tuff on the nerves when you had to much coffee. Quotes in real
>> time were useless most of the day in the S&P with fast markets and 50,100
>> point ticks the norm gives new meaning to the word slippage. Merc may have
>> to invent a new stop order in the S&P something like "SIS", Stop It
>> Somewhere..
>>
>> Robert
>
>
Stewart Taylor
Taylor Fixed Income Outlook
Voice: 501-219-9774
Fax: 501-228-0963
E-Mail: staylor@xxxxxxx
Web Site: http://www.cei.net/~staylor/
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